Even with all the technology available today, mistakes can still happen. Some mistakes can have a minimal effect on financial statements and can be easily corrected, however, others are more serious and could significantly impact decision making and misrepresent a business's true financial health.
The following are some common accounting system issues that arise and suggestions on how to avoid them.
Not Doing Timely Reconciliations
Monthly processes to review common accounts such as bank and credit cards for errors, is vital to keeping a true and accurate picture of how things are going. The reconciliation process helps identify problems before they can get too big, making quarter and year end much easier. Reconciliations help a business:
- Calculate accurately how much cash/credit is available
- Check for fraudulent activity
- Catch bank errors (They do happen!)
- Know if any customer payments have missed being entered or were rejected from the bank
Errors in Data Entry
These are probably one of the most common causes of incorrect reporting and profit loss. Humans do make mistakes, and while a business can't prevent them all, having processes in place to ensure errors are identified and corrected timely will go a long way to ensuring accuracy is maintained. Some ways a business can mitigate the risks are:
- Maintaining a healthy work balance without overloading staff There is a limits for data entry a single person can do in a day.
- Set up review processes, which is common when posting is required. Ensure there are other sets of eyes on the books by separation of work. For example, one person does the data entry while another approves and posts. As a business owner or manager, make sure you know how to use the accounting system to review work and run reports.
- Training, training, training. It pays to have someone knowledgeable and well trained. Invest in your company's financial health by making sure you are keeping your staff well trained on process and expectations. Knowing how your accounting software platform was designed to work can be very beneficial for improved productivity.
Learn how Connected's Activating and Using Change Logs can help you track down and figure out where things happened.
Procedures not Documented
Your company could miss out on valuable tax deductions if transactions are not documented correctly. Ensuring compliance with regulations around tax reporting includes:
- Clear Policies. Make sure that expenses are not reimbursed without the correct supporting documentation.
- Save the Trees. Go paperless. Using your accounting software solution to attach documents to transactions, can help keep vital information easy to find.
- Use Technology. There are several different expense reporting technologies out there, which make it easy to report and attach documentation from mobile devices.
- No bill no pay. Make sure that vendor payments are supported by the correct documentation before they are paid.
The Connected Accounting and ERP platform can help mitigate many of these common errors. Learn how Connected can help make your business more efficient and reduce the occurrence of many of these common errors ensuring a healthy financial reporting process that benefits all involved.